Wednesday, August 28, 2019

The effect of oil price changes on stock markets of the GCC Essay

The effect of oil price changes on stock markets of the GCC - Essay Example In addition, the effects of the oil price trend to the leading beneficiary of oil in the GCC, Qatar, will be addressed. Over the past year, the price of oil has reduced significantly. Numerically, the price of oil has lost 40% of its value. The minimized price of oil has led to the global decrease of oil and oil products. The trend has been welcomed by the consumer as countries enjoy a record low price of oil. Regardless of the benefits, oil producers have suffered massively due to losses incurred. Specifically, GCC countries have recorded reduced low markets. With the price of oil dwindling further, the stock market of GCC countries face the risk of an economic crisis unless an intervention is developed to minimize the risks (Arouri, Bellalah & Nguyen, 2011). Over the years, GCC countries have been best placed to manipulate oil prices thus creating price targets that would suit their economic demands. With the new changes, how much of effect does it have on the GCC countries? The GCC comprises of six countries. They are Qatar, Kuwait, Bahrain, Oman, United Arab and Saudi Arabia. The six nations develop their economic background from the export of oil. The nations produce 20% of the world oil (Arouri, Bellalah & Nguyen, 2011). This places them as the greatest oil producers globally. In addition, the GCC has 47% of the global oil reserves. This is in addition to that the control 36% of the global oil exports. It is evident that the GCC is massively dependent on oil. In an argument by Arouri, Bellalah & Nguyen (2011) the influence of the oil prices has a massive influence on the stock market of the GCC countries. The change in oil prices is directly proportional to the changes in the stock market. Specifically, an increase in the oil prices influences a massive influence on the GCC stock market. This is based on that there is massive investments in the oil industry in the market. Arouri, Bellalah & Nguyen (2011) are of the assumption that the

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